Baxter County Friends of the Taxpayers

MEETING NOTES

BAXTER COUNTY FRIENDS OF THE TAXPAYERS

SATURDAY, JANUARY 26, 2008

BCFT Director Frank Kaye called the meeting to order at 1:00 pm at Western Sizzlin Restaurant.  He welcomed everyone and invited guests to introduce themselves.

Treasurer’s report:  Balance as of 11-24-07 was $755.85.  There has been no activity on the account since then.  There was no meeting held in December.

Membership report:  Suzan reported a roster total of 66 paid members, and that a quorum was present at the meeting.  She asked if everyone had had a chance to read the minutes from the last meeting, and offered copies to new members and anyone who had not received them.  There were no corrections or additions made.

Dues & Officers:  According to our Bylaws, the January meeting is considered our “annual” meeting, and we must set the dues and elect officers for the coming year at this time.  After discussion, it was decided that dues will stand at $15 for one person, $25 for a couple for 2008, and must be paid by April 1^st.  All officers agreed to keep their current positions; there were no nominations from the floor, so the existing officers will carry over for 2008.

Old Business

School bond issue:  Frank began by giving a summary of the proposed millage increase and bond issue, explaining that the new bond issue would refinance the existing bond of 3.92 mils (voted in in 2003), which will generate approximately $11 million, then float a new bond of 2.95 mils for the remaining $24.4 million, both of which will run until 2038.  There are financing fees and other costs involved which will bring the total of the amount to be bonded to $41,055,000. 

Several financing options have been presented to the school board, including that of leaving the 3.92 bond alone and allowing it to mature at its scheduled maturity dates, and floating a new bond for the total amount of new indebtedness instead.  “Dates” (plural), because this bond is actually 3 bonds rolled into one via refinancing over the years (which can be done without voter approval), and has 3 separate maturity dates (2009, 2012 or 13, and 2017).  Our research has shown that following this option would save the taxpayers approximately $6.5 million, in spite of the fact that the new bond issue would be for a higher total millage rate (probably around 4.5-5 mils).

A member pointed out that the school board would never go for that plan, because as soon as a bond is paid off, the millage rate used to pay it off goes away – so the associated revenue goes away.

Another member stated he had contacted the district’s business manager, Ann Thomas, and she told him that if the millage increase doesn’t pass, the school board will not have the money necessary to pay this year’s bond payment.  Frank told him that he didn’t think that was correct, and that it would be addressed a little later.

He went on to explain that if the new bond issue proposed by the school board is approved, the millage rate will go from 3.92 mils to 6.87 mils, to run from 2008 through the year 2038 – 30 years of our debt, our children’s debt, and our grandchildren’s debt, to pay for construction that will only see us through the next 12-15 years of anticipated growth in the district.  The annual revenue generated by this millage is based upon the 2006 assessed valuation of property in Baxter County (the latest numbers available, as property tax payments run 18 months in arrears).  Based on figures published by the school board, the new bond issue would require payments of $3,112,069 per year, for 30 years, for a total of $93,362,070 paid in.  The actual cost to pay off the bond is only $81,956,325, though – which gives the district a surplus of $11,405,745 to spend any way they want.  Yes, it’s legal – state law gives them the freedom to do this.  There is also a clause in the same section of code that says the surplus may be used to pay down any indebtedness owed by the district, but there is no mandate that they do so.  This surplus is generally used to supplement the district’s operations & management budget.

That $11.4 million surplus is based on the assumption that property tax values in Baxter County will not increase at all over the next 30 years (unlikely).  If the assessed valuations go up even 5% over that period, the district’s surplus will reach $157,396,856.  Again, this is taxpayer money that the district can spend any way it chooses.

Some statistics presented to the group:  average daily attendance from 2001-2006 has increased by 182 students (5.1% growth); facilities are at about 90% capacity overall, with the most crowded conditions in K-3.  Over that same period, a total of 167 adult employees (classroom and non-classroom combined) have been added to the district’s payroll, an increase of 52.4% for classroom teachers and 26.6% for non-classroom employees, or almost 1 new adult employee for every child.

A member pointed out that the state is actually driving this problem – some rules were changed in recent years to require 1 full-time adult for certain special-needs students and to require that special-needs students be integrated into regular classrooms.  Space requirements also have been changed; one particular example is that of cafeteria space, now mandated to be 15 square feet per student.  (Secretary’s note:  this figure includes all parts of the cafeteria, such as the kitchen area, aisles between the tables, storage rooms, etc., and not just seating space at the tables.)

More statistics:  for 2001-2007, the Consumer Price Index is up 14%; the BaxCo tax base (assessed valuation) is up 27.8%; total expenditures by the school district are up 41.9%.  The district is outspending its O&M budget (which is funded by a mandatory 25 mils voted in in 2003 plus an additional .29 mils that were already in place at the time of the vote) and relying upon the surplus money left over after making bond payments to cover their shortfall. 

A member asked whether the space requirements were actually from the state, or just the local school board, and whether we could get a copy of them.  Frank said that they were state requirements and that the info is available and that we’d try to get a copy before the next meeting.  He went on to say that we are not going to be able to escape the millage increase; it might not happen in April, but it will happen.  We don’t want to be viewed as obstructionists, but need to insist that the improvements and new construction be done in the most economical way possible, including paying the bonds off as quickly as possible.  The school board has agreed with this in principle, but will not put the language into the bond proposal and will not publicly acknowledge their “agreement” until after the election is over.  (If then.)

A member asked when the last millage increase occurred and why they waited so long to ask for another one.  Frank explained that the last time around (1995), there was a promise of sorts made that they wouldn’t ask for another one for at least 10 years.  They have also been refinancing existing bonds over the years to raise money for projects, which they can do without voter approval.

A member said that he had been approached by a member of the hospital board who said that the hospital will not be able to recruit quality doctors to come live/work here if the schools aren’t up to their standards, and that some have already left because of the school system.  Frank said that the district can’t continue to look at taxpayers as bottomless pits; most people’s personal income (in most cases) is fixed, but expenses keep going up.  The school board, on the other hand, has the luxury of having their revenue go up when the tax base goes up as a result of growth in the community. 

A member spoke about his experiences as a teacher, stating that it makes no difference whether a teacher uses a blackboard and chalk or the latest laptop computers; there is no correlation between the amount of money spent per student and scores.  Throwing money at the problem doesn’t solve it – proof is that the schools in AR that spend the most per student don’t necessarily have the highest test scores.

He shared some statistics with the group:  the cost of living allowance (COLA) has gone up a total of 17.16% from 2001-2006; the total expenditure per student in AR has increased 35% (more than twice the COLA), and teacher salaries (BA level) are up 33.77% (about 98% of COLA).

He reported that he had asked the school board for a financial profile for the past 5 years and projections for 5 years into the future and was ignored.  He stated that the administration owes a full financial accounting to the electorate, and that there will be no internal audit of expenditures or other relevant issues before the election.  The millage increase will be sold on the basis that “we’re the 10^th lowest taxing district in AR, our kids need it, so pass it.”  He also said that he presented the board with information on 2 alternative modular building construction companies which would offer substantial savings for the same size projects, and they wouldn’t even investigate that possibility.

He said that the state mandates currently apply to new construction only and that most of the construction/renovation projects in MH are not high-priority items compared to others in the state, only the one at Nelson-Wilks-Herron, and it’s about mid-level; the board is giving everyone the impression that things are terrible-terrible-terrible, and it just isn’t so.

A member asked what would happen if the millage increase fails at the election in April.  Frank said that he learned in a meeting with Doug Eaton, the director of the Facilities & Transportation division of the state board of education, that the state has never yet taken control of a school board when a millage has failed.  They will come in and evaluate the facilities and determine which things are less than “adequate,” and mandate that the district take care of these items with money they have on hand in their O&M fund.  If they don’t have the money to do what the state requires, they will have to continue to float millage increases past their voters until one passes.  The state can also make the district use money that would ordinarily be spent on “activities not described as part of an adequate education” (elective programs, etc.) to pay for these projects.

A member asked what BCFT’s stance will be.  After some discussion, it was decided to table this issue until the February meeting, because 2 of our fact-finders were not able to attend today, and more time was needed to develop the final plan.  At a minimum, once the position is finalized, we will probably place an insert in the Baxter Bulletin (cost about $550) and make use of e-mail and the BCFT website to share it with the public.

A member pointed out that the Norfork school district recently passed their millage increase.  Frank said that was because they did it the right way – they approached the voters first and found out what they would support, then built the plan and placed it on the ballot.  Cotter Schools are planning to do the same thing.  MH, on the other hand, brought in a 52-member Facility Needs Steering Committee and asked them to rubber-stamp a pre-engineered proposal.

Frank asked for a motion to delay further discussion and decisions until next month – motion was presented and passed.  He then asked to revisit the motion, as the secretary’s wish to comment had been overlooked before the motion.

Suzan spoke for a teacher at the high school who had intended to come to the meeting, but for personal reasons could not.  The teacher indicated general support for BCFT’s position and actions, but expressed concern that retirees were going head-to-head with not only the school board over this issue, but with each other, and that we needed to find a way to get along and work out our differences, so that we (retirees) don’t all get painted with the same brush.

A member asked where the friction lies between BCFT and retirees … Frank said that BCFT’s primary base is retirees, though we do have younger members.  The majority of voters, though – of any age – have agreed with us on the 3 issues we’ve taken to election.  The continuing rub is that we’re “not supporting the school system” – we generally agree with the support part of it, but don’t agree we should just give them all the money they want.  There are a number of ways to reduce the cost to the taxpayer, and we need to pursue this in the least confrontational way possible.  The main reason BCFT publicly backed the library’s capital campaign was to show that we want – and will support – positive change in the community.

With no further discussion, the meeting adjourned at 2:30 pm.  Next meeting is scheduled for Saturday, February 23, 2008, at 1:00 pm at the Western Sizzlin’ Restaurant, Hwy 62 next to the Ramada Inn; come at least a half hour early if you would like to have lunch before the meeting starts.  There is NO requirement that you purchase a meal to come to the meeting.

                                                                                                            Suzan P. Kaye, Secretary
Friday, February 22, 2008